Power Company of Karnataka Ltd. vs Maharashtra Electricity Regulatory Commission & Ors.

IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
Court-2
APPEAL Nos. 244 & 245 of 2016
rd
Dated : 3 July, 2026
Present: Hon’ble Ms. Seema Gupta, Officiating Chairperson
Hon’ble Mr. Virender Bhat, Judicial Member


In the matter of:
APL No. 244 OF 2016
Power Company of Karnataka Ltd. .... Appellant(s)
Versus
Maharashtra Electricity Regulatory Commission & Ors. .... Respondent(s)

Counsel on record for the Appellant(s) : Shahbaaz Husain
Fahad Khan
for App. 1

Counsel on record for the Respondent(s) : Pratiti Rungta
for Res. 1

Udit Gupta
Anup Jain
Akshay Goel
for Res. 2

Hemant Singh
Mridul Chakravarty
Biju Mattam
Sourav Roy
Supriya Rastogi Agarwal
Chetan Kumar Garg
Lakshyajit Singh Bagdwal
Ankita Bafna
Robin Kumar
Harshit Singh
Nehul Sharma
Alchi Thapliyal
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Appeal Nos. 244 & 245 of 2016 Page 1 of 15

Sanjeev Singh Thakur
Lavanya Panwar
Indrayudh Chowdhury
Syed Fazl Askari
Nishant Kumar
Jay Lal
Pawan Singh
Sandeep Kumar
Kamesh Kumar Dvivedi
Rohit Raj Pal
Shailendra Singh
for Res. 4
APL No. 245 OF 2016
Power Company of Karnataka Ltd. .... Appellant(s)
Versus
Maharashtra Electricity Regulatory Commission & Ors. .... Respondent(s)

Counsel on record for the Appellant(s) : Shahbaaz Husain
Fahad Khan
for App. 1

Counsel on record for the Respondent(s) : Pratiti Rungta
for Res. 1

Hemant Singh
Mridul Chakravarty
Biju Mattam
Sourav Roy
Supriya Rastogi Agarwal
Chetan Kumar Garg
Lakshyajit Singh Bagdwal
Ankita Bafna
Robin Kumar
Harshit Singh
Nehul Sharma
Alchi Thapliyal
Sanjeev Singh Thakur
Lavanya Panwar
Indrayudh Chowdhury
Syed Fazl Askari
Nishant Kumar
Jay Lal
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Appeal Nos. 244 & 245 of 2016 Page 2 of 15

Pawan Singh
Sandeep Kumar
Kamesh Kumar Dvivedi
Rohit Raj Pal
Shailendra Singh
for Res. 3
J U D G M E N T
PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER
1. The issue which had arisen for our consideration during the
hearing of these two appeals and is being addressed vide this order

is :-
“Whether these two appeals have become infructuous and
not maintainable on account of the fact that M/s Global
Energy Pvt. Ltd. (Respondent No. 4 in Appeal No. 244 of
2016 and Respondent No. 3 in Appeal No. 245 of 2016)
has undergone Corporate Insolvency Resolution Process
nd
(CIRP) w.e.f. 2 December, 2019 and the resolution plan
also has been approved by the National Company Law
rd

Tribunal on 3 July, 2024 in CP(IB) No. 2520/MB/IV/2018”.
nd
2. It was contended on behalf of the 2 Respondent –
Maharashtra State Electricity Distribution Company Ltd. (MSEDCL)
that the proceedings in these two appeals pending before this
Tribunal have been shown as first entry under the contingent liability
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Appeal Nos. 244 & 245 of 2016 Page 3 of 15

in schedule 7 of the resolution plan and, therefore, upon approval of
the resolution plan under Section 31 of the Insolvency Bankruptcy
Code (IBC) having the effect of extinguishing the pre-existing
claims/liabilities including contingent claim/liability as well as
proceedings against GEPL, the proceedings of the instant two
appeals cannot be continued and the same ought to be disposed off

as having become infructuous.
3. Learned Counsel for MSEDCL would submit that the IBC
provides “Clean Slate Principle” whereby the successful resolution
applicant takes over the corporate debtor free from past
encumbrances in order to ensure the revival of corporate debtor
without the burden of legacy disputes as envisaged under Section
30(2), 31 and 32A of the IBC. In this background, it is contended on
behalf of the MSEDCL that the claims of the Appellants in these two
appeals for refunds/adjustments under the Final Balancing and
Settlement Mechanism (FBSM), or its challenge to deviation under
the standby power agreements executed between MSEDCL and
GEPL are pre-CIRP claims and thus cannot be agitated in law now
for the reason that these are only directed against the GEPL and
stand extinguished upon approval of resolution plan for GEPL by the

NCLT.
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Appeal Nos. 244 & 245 of 2016 Page 4 of 15

4. These contentions on behalf of the MSEDCL have been
vehemently refuted on behalf of the Appellants and GEPL.
5. It is argued that these contentions agitated on behalf of the
MSEDCL are based on the mis-characterization of the prayers made
by the Appellants in these appeals. It is submitted that mere perusal
of the pleadings in these two appeals would make it clear that the
th
thrust of the appeals is against the impugned orders dated 27 April,
th st
2015 and 28 April, 2015 passed by the 1 Respondent –
Maharashtra Electricity Regulatory Commission (hereinafter referred
to as “the Commission”) as also against the legality of the standby
power agreement executed between the MSEDCL and GEPL. In
other words, it is argued that the prayer of the Appellants is against
the Maharashtra State Load Despatch Centre (MSLDC)/MSEDCL,
the beneficiary of the impugned orders passed by the Commission as
well as standby power tariff reflected in the standby power
agreements, and not GEPL. Accordingly, it is contended that the
contentions of MSEDCL that the prayer of the Appellants in these two
appeals is directed against the GEPL is totally false statement and

runs in the teeth of the pleadings as well as prayer in their appeals.
6. We have heard Shri V.M. Kannan, Learned Counsel for the
Appellants, Shri S.K. Rungta, Learned Senior Counsel appearing for
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Appeal Nos. 244 & 245 of 2016 Page 5 of 15

the Respondent Commission, Mr. G. Sai Kumar, Learned Senior
Counsel appearing on behalf of Respondent No. 2 ( MSEDCL) and
Mr. Sajan Poovayya, Learned Senior Counsel appearing on behalf of

GEPL.
7. Before analyzing the rival submissions made on behalf of the
parties by the learned counsels, we find it apposite to briefly advert to
the facts and circumstances in which these two appeals came to be

filed by the Appellants.
th
8. Appeal No. 244 of 2016 is directed against the order dated 27
April, 2015 passed by the Commission in case No. 181 of 2015
whereas Appeal No. 245 of 2016 is directed against the order dated
th
28 April, 2015 passed by the Commission in case No. 38 of 2015.
9. The appeals pertains to the issue of applicable commercial
terms for the settlement of deviations that arose during the course of
supply of power by GEPL to Bangalore Electricity Supply Company
Limited (BESCOM) represented by the Appellant. The underlying
power supply transaction was unique open access transaction for the
reason that despite the end consumer i.e. BESCOM being situated in
the State of Karnataka and the trader i.e. GEPL through whom the
transaction was being implemented being situated in the State of
Maharashtra. GEPL had approached MSEDCL for grant of
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Appeal Nos. 244 & 245 of 2016 Page 6 of 15

transmission open access. MSEDCL, initially insisted that deviations
emanating during the course of power supply were to be settled as
per the Maharashtra Final Balancing and Settlement Mechanism
(FBSM) which is applicable to intrastate Maharashtra transactions.
Appellants, acting as the authorized representatives of BESCOM,
had agreed to the applicability of FBSM. However, eventually,
MSEDCL refused to grant transmission of open access on the ground
th
that as per order dated 17 May, 2007 passed by the Commission in
case No. 42 of 2006 which introduced the Availability Based Tariff
(ABT) Regime within Maharashtra, deviations of only State Pool
Participants (SPPs) could be settled as per the FBSM, and since
GEPL was a trader and not an SPP, it could not be accommodated

within the FBSM.
10. Aggrieved by such refusal, GEPL approached the Commission
by way of Petition No. 71 of 2014 seeking grant of transmission open
access. The petition was disposed off by the Commission vide order
nd
dated 2 June, 2014 observing therein that the underlying power
supply transaction was an intrastate transaction in Maharashtra and
directed MSEDCL to grant transmission open access for the same.
The Commission directed that “suitable changes should be done by
MSEDCL for commercial settlements in the existing FBSM of
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Appeal Nos. 244 & 245 of 2016 Page 7 of 15

Maharashtra State in order to accommodate this particular STOA
transaction”.
11. Accordingly, the transaction in question was found to be an
intrastate transaction within Maharashtra and required the parties to

seek intra-state transmission open access from MSEDCL.
12. However, it is to be noted that the Commission did not grant
any blanket direction for grant of Short Term Open Access (STOA) to
GEPL for supply of Electricity to the Appellant. In fact the Commission
directed GEPL to submit the documents for requirement of STOA
upon noticing that the generator M/s Gupta Energy Private Ltd. which
has issued NOC for STOA to GEPL was in default with respect to the
payment of monthly charges. The Commission also observed that in
case GEPL wishes to continue with the same generator, M/s Gupta

Energy Pvt. Ltd. will have to clear all dues.
nd
13. In pursuance to the said order dated 2 June, 2014 of the
Commission, Maharashtra State Load Despatch Centre (MSLDC)
th
issued letter dated 9 June, 2014 requiring GEPL and the Appellant
to comply with the certain conditions and submit necessary
documents including a standby agreement with MSEDCL.
th
Subsequent thereto, a standby agreement dated 13 June, 2015 was
reached between GEPL and MSEDCL for supply of electricity to the
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Appeal Nos. 244 & 245 of 2016 Page 8 of 15

Appellant. In terms of the said agreement, MSEDCL was made
entitled to charge either the temporary tariff or UI charges whichever
is higher in the event of over-drawl by the Appellant. Further clause
1 of the agreement made it obligatory upon GEPL to ensure that the
complete requirement of open access in normal course shall be met

through its own generator without depending upon MSEDCL.
14. Thus GEPL and the Appellant agreed for levy of either
temporary tariff or UI charges whichever is higher in the event of over-
drawl for supply of electricity to the Appellant. Accordingly, power
th
supply to the Appellant w.e.f. 11 July, 2014 was in terms of the said
standby power agreement. GEPL had even made part payments in
this regard to MSEDCL.
15. The Power Purchase Agreement (PPA) executed between
GEPL and BESCOM was also duly amended in order to textually and

fully incorporate the FBSM.
16. It appears that subsequently, GEPL felt aggrieved by the fact
nd
that inspite of order dated 2 June, 2014 of the Commission
mandating the transaction to be accommodated within FBSM,
MSEDCL commenced charging non FBSM and high penal tariffs for
over-drawl by BESCOM and also treated the underdrawn units as
lapsed. GEPL filed case bearing No. 181 of 2014 before the
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Appeal Nos. 244 & 245 of 2016 Page 9 of 15

Commission praying for direction for settlement of deviations in terms
of the FBSM. A similar prayer appears to have been made by GEPL

in another case No. 38 of 2015 filed before the Commission.
17. Both these petitions were dismissed by the Commission vide
th th
orders dated 27 April, 2015 and 28 April, 2015 respectively thereby
upholding the charging of temporary tariffs for supply of electricity to
the Appellant in terms of the said standby power agreement and
holding that the arrangements between the parties as incorporated in
the standby power agreement is within the FBSM mechanism in the

peculiar facts of the case.
18. GEPL assailed both these orders by way of separate appeals
th
before this Tribunal. Order dated 27 April, 2015 passed in case No.
181 of 2014 was challenged in Appeal No. 111 of 2015 and order
th
dated 28 April, 2015 passed in case No. 38 of 2015 was impugned

in appeal No. 112 of 2015.
19. During the pendency of these appeals before this Tribunal,
th
GEPL entered into a fresh standby agreement dated 29 August,
2015 which contained terms and conditions for supply of electricity to
st
the Appellant w.e.f. 1 July, 2015. At the same time, the Appellant
st
entered into a supplemental PPA dated 1 October, 2015 with
GEPL. At this juncture, the Appellant herein sought to intervene in
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Appeal Nos. 244 & 245 of 2016 Page 10 of 15

these two appeals and filed applications bearing IA No. 399 of 2015
(in Appeal No. 111 of 2015) and IA No. 400 of 205 (in Appeal No. 112

of 2015) in this regard.
20. However, it appears that there had been some agreement
between GEPL and MSEDCL requiring GEPL to withdraw these two
appeals and accordingly based upon such agreements between the
parties, both the appeals came to be dismissed as withdrawn by this
th
Tribunal vide order dated 28 October, 2015. As a sequitur, the IA
No. 399 of 2015 and IA No. 400 of 2015 filed by the Appellant were
disposed off having become infructuous. The relevant portion of the
th
said order dated 28 October, 2015 of this Tribunal is extracted
herein below:-
“Since as per the agreement of the parties, both these
appeals are to be withdrawn unconditionally and there is
no dispute between the rival parties regarding execution
of this document. This document is accordingly, accepted
and both the appeals being Nos. 111 of 2015 and 112 of
2015 are hereby ordered to be withdrawn. However, there
is no order as to costs.
So far as I.A. No.400 of 2015 in Appeal No.111 of 2015
and I.A. No.399 of 2015 in Appeal No.112 of 2015 seeking
impleadment on behalf of power company of Karnataka
Ltd. and Bangalore Electricity Supply company Ltd. as
respondents in these appeals is concerned, the same are
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Appeal Nos. 244 & 245 of 2016 Page 11 of 15

already on record of these appeals. Since the main
appeals have been ordered to be withdrawn and there
remains to substance now in allowing the aforesaid
impleadment applications.
In view of above, the aforementioned interim applications
(IAs) are hereby disposed of as being infructuous.”
21. The Appellant approached Hon’ble Supreme Court challenging
the said dismissal of its applications by the Tribunal vide said order
th
dated 28 October, 2015. The Civil Appeal Nos. 911 & 912 of 2016
filed in this regard by the Appellant were disposed off by the Apex
th
court vide order dated 15 February, 2016, relevant part of which is

reproduced herein below”-
“Mr. Mukul Rohatgi, the learned Attorney General for
India, appearing on behalf of the appellant, has submitted
that the appellant would like to withdraw these appeals so
as to file appeals before the Appellate Tribunal for
Electricity, Principal Bench, New Delhi. Permission is
granted with liberty to approach the Tribunal.
The civil appeals are disposed of as withdrawn.”
22. It is in these circumstances that the Appellant has approached
this Tribunal by way of the instant two appeals. The Appeal No. 244
th
of 2016 is directed against the order dated 28 April, 2015 passed by
the Commission which had earlier been impugned in Appeal No. 112
of 2015 whereas Appeal No. 245 of 2016 is directed against the order
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Appeal Nos. 244 & 245 of 2016 Page 12 of 15

th
dated 27 April, 2015 passed by the Commission which had earlier
been impugned by way of Appeal No. 111 of 2015.
th
23. It cannot be gainsaid that both the Impugned orders dated 27
th
April, 2015 and 28 April, 2015 of the Commission are in favour of
MSEDCL and against the GEPL. These orders uphold the levy of
standby power purchase/temporary tariff by MSEDCL in contrast to
FBSM rates due to which MSEDCL as well as MSLDC have become
richer. The prayer of the Appellant in the two appeals is to direct that
the commercial settlement of overdrawl/underdrawl/standby power
qua transactions between the Appellant and MSLDC has to be
commercially settled based upon FBSM mechanism vide order dated
nd
2 June, 2014 passed in case No. 71 of 2014.
24. We feel in agreement with the submission of the Learned
Counsel for the Appellant that the thrust of the appeal is against the
th th
legality as well as validity of the orders dated 27 April, 2015 and 28
April, 2015 passed by the Commission as well as that of standby
power agreement executed between the GEPL and MSEDCL. It is,
therefore, evident that the appeals assail the action of
MSEDCL/MSLDC whereby MSEDCL has been levying temporary
tariff for the power supply by GEPL to Appellant instead of resorting
to FBSM mechanism. Thus, the prayer of the Appellant in the two
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Appeal Nos. 244 & 245 of 2016 Page 13 of 15

appeals is not directly against the GEPL and is manifestly against the
MSEDCL which has been the beneficiary under the two impugned

orders passed by the Commission.
25. It is also evident that in case the Appellant succeeds in these
two appeals, MSEDCL would be required to reimburse excess money

levied by it from GEPL, to GEPL.
26. Perusal of relevant clauses of the resolution plan approved by
rd
NCLT, Mumbai would reveal that any claim of 3 party against GEPL
does not survive as on date of the approval of the said plan but on
rd
the other hand, the claims initiated by GEPL against any 3 party

would continue to exist.
27. “Clean Slate” Principle or Doctrine as elucidated in various
judgement of the Hon’ble Supreme Court envisages that the claims
against the corporate debtor stand extinguished upon approval of the
resolution plan under Section 31 of IBC. However, it does not apply
to the proceedings which, if successful, would enhance and protect
the assets or rights of the corporate debtor or which are against the
rd

3 party and not against the corporate debtor.
28. The adjudication of these two appeals and any final order
passed thereupon would not result in crystallization of any liability
upon GEPL. On the contrary, if the appeals are allowed and the
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Appeal Nos. 244 & 245 of 2016 Page 14 of 15

impugned orders are set aside, the GEPL would stand to benefit as it
would be entitled to receive some money from MSEDCL.
29. In the light of the above discussion, we hold that there is no
merit in the contentions agitated on behalf of MSEDCL that the instant
appeals have become infructuous as well as non-maintainable upon

approval of resolution plan qua GEPL by the NCLT, Mumbai.
30. It is manifest that the approval of resolution plan for GEPL by
rd
NCLT, Mumbai on 3 July, 2014 will not have any impact upon these
two appeals as well as their outcome for the reason that any final
order to be passed in these two appeals would not fasten any liability
upon GEPL and to the contrary, GEPL would stand to benefit from
such order as it may be entitled to receive some money from

MSEDCL.
31. Therefore, let the proceedings of these two appeals continue.

The appeals shall be heard on merits.
32. List the appeals for hearing before the Regular Bench of Court-

II on 13.08.2026.


(Virender Bhat) (Seema Gupta)
Judicial Member Officiating Chairperson

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REPORTABLE / NON REPORTABLE
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